First Solar Stock Jumps As Prospect of Cheaper Borrowing Costs Drives Chart Breakout

Fist Solar (FSLR) will remain in the spotlight Monday after the solar panel maker’s shares broke out from a key chart pattern on Friday after a soft April jobs report fueled hopes that sooner-than-anticipated interest rate cuts would reignite consumer appetite within the embattled solar sector, which has grappled with sluggish demand and a backlog of inventory over the past year.

Falling interest rates benefit First Solar and other companies in the space by reducing borrowing costs, making solar energy product installations more affordable for a broader range of customers. Lower funding costs also help finance projects that typically require significant upfront investments in infrastructure and technology.

The Tempe, Arizona-based solar panel maker also eased fears of slowing domestic demand within the industry last week when it posted better-than-expected quarterly earnings and revenue. The two metrics grew 450% and 45%, respectively, from the same quarter last year, indicating that a recovery in the sector may come sooner than expected. Last month, rival Enphase Energy (ENPH) scared investors after missing Wall Street expectations, citing a further softening in U.S. demand and an ongoing inventory glut in Europe.

Separately, First Solar also sits well positioned to benefit from the data center boom as tech giants look to carbon-free energy solutions to run their growing artificial intelligence (AI) infrastructure. Last week, Windows maker Microsoft (MSFT) announced it plans to invest more than $10 billion developing renewable energy capacity to help power data centers. The Magnificent Seven member has pledged to have all of its electricity matched by zero-carbon energy purchases by the end of the decade.

Key Level to Watch Following Pennant Breakout

First Solar shares broke out from a three-week pennant chart pattern Friday on increasing volume—rising 6.1% to close the week at $191.55—indicating a continuation of the current uptrend that commenced in mid-March.

Moreover, the 50-day moving average recently crossed above the 200-day moving average to generate a bullish golden cross buy signal. Looking ahead, investors should keep a close eye on the $220 level, an area where the price may run into selling pressure from a horizontal line connecting a series of swing highs between March and July last year.

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As of the date this article was written, the author does not own any of the above securities.